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Mixed reaction for big-spending Vic budget

Melissa Iaria

The Victorian government will stake its November re-election bid on its record infrastructure splurge but the opposition has accused it of ignoring basic services.

The government has outlaid $27 billion on new infrastructure in the 2014/15 budget and forward estimates period of four years, including $24 billion on transport infrastructure.

In addition to the major infrastructure outlay, the government will go to the November election with a string of hefty back-to-back surpluses.

A $1.3 billion operating surplus is forecast for 2014/15, growing to $3.3 billion by 2017/18.

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Victoria is likely to be the only state to forecast back-to-back surpluses over the next four years, Treasurer Michael O'Brien said.

An $11 billion Melbourne rail link to the airport forms part of a big pre-election budget cash splash on major Victorian road and rail projects, which includes $10 billion in state funding to finish the second stage of the East West Link road project.

Mr O'Brien said the Napthine government's tight rein on spending meant that it was the only state government that could talk of a substantial and growing surplus.

"Because of this economic management, we are able to deliver this sort of transformational, job-creating infrastructure projects that Victoria needs," he told reporters.

But Opposition Leader Daniel Andrews says the budget does nothing for ordinary people and does not focus on basic services.

Mr Andrews said there was nothing to fix the crisis in TAFEs, over-crowded emergency departments and the ambulance service.

Mr Andrews says infrastructure projects announced in the budget would take years to come to fruition and it does nothing to improve basic education, health and emergency services.

"This is a panicked budget from a panicked and desperate premier, someone who is petrified that he will lose the election at the end of the year."

State coffers will be bolstered by the privatisation of Victoria's rural finance lender, expected to net the government $400 million, and the sale of a 40-year lease of the Port of Melbourne.

From July 2015, a new levy will also apply to planning permit applications in metropolitan Melbourne for $1 million-plus developments.

There will be a $32 hike in car registrations and a rise in vehicle stamp duty.

In a sweetener for businesses, the payroll tax will be cut to 4.85 per cent from July, saving employers $234 million over four years.

The Melbourne rail link will get under way in mid-2016, creating 3700 jobs at the peak of construction.

The rail route is different to what has previously been proposed as part of the Melbourne Metro Rail project.

Mr O'Brien said the latest route would have greater capacity, its construction would be less disruptive to the CBD and included the airport rail link, offering a 25-minute journey between Melbourne Airport and Southern Cross station.

But Mr Andrews said it fell short of the project ranked by Infrastructure Australia as Victoria's number one transport priority.

The Victorian Council of Social Service says the infrastructure splurge will help turn around the jobless rate in a sluggish economy while the Australian Industry Group said the projects will boost the building industry.

But the Victorian Trades Hall Council attacked the budget for lacking a jobs plan, saying the jobless rate was at its highest level in a decade.